By Bryan Manabat
[email protected]
Variety News Staff
COMMONWEALTH Utilities Corporation Chief Financial Officer Betty Terlaje said Thursday that CUC is not violating Gov. David Apatang’s price freeze executive order, adding that the recent increase in the Fuel Adjustment Charge is not a price hike but a formula-driven pass-through of actual fuel costs.
The issue surfaced during a May 21 special CUC board meeting when board member Rebecca White asked why CUC was allowed to raise the FAC while the governor’s price freeze remains in effect. Terlaje said the public’s confusion is understandable but misplaced.
“What I emphasized was that price gouging is when you raise your prices to take advantage of a situation when demand is high and you want to make more profit out of it,” Terlaje said. “There was no price increase necessarily. What it is, is in our methodology. It stayed and remains the same.”
She said the FAC is determined by the MOPS fuel index and CUC’s longstanding formula, which has remained unchanged since 2012 and 2016.
“That methodology has not changed,” she said. “Therefore, I think the price freeze does not apply to the Fuel Adjustment Charge.”
Board Chairman Allen Perez backed her explanation, saying the FAC is “just a pass-through” and not a profit-making mechanism.
The FAC rose to 44 cents per kilowatt-hour effective May 15 under a Commonwealth Public Utilities Commission order. But even that rate remains well below the actual cost of fuel, which Terlaje said is now 60.48 cents per kilowatt-hour. The gap means CUC is losing money each time it supplies electricity to customers.
“We’ve already lost the 20 cents that we were under-recovering for April,” she said. “And now we’re losing another 16 cents for the month of May.”
Terlaje warned that the under-recovery is draining funds needed for operations, repairs, and restoration efforts.
“We’re tapping into that and borrowing to keep afloat,” she said. “We are at a point where we’ve obligated far more than our cash on hand and far more than what we expect to receive in collections.”
She urged the CPUC to approve FAC adjustments at the actual calculated rate to prevent deeper financial strain.
“If they want to change the methodology, that’s fine,” she said. “But delaying the recovery of fuel costs just adds on to what’s already high.”
The governor’s price freeze remains in effect for goods, services, and rentals during the disaster period, but CUC said the FAC is governed by statute and CPUC regulation — not by executive order.
The CPUC last week approved CUC’s petition, filed March 31, to raise the FAC from 24.5 cents to 44.489 cents per kilowatt-hour effective May 15. The rate reflects April’s global ultra-low sulfur diesel prices, which doubled from March.
Earlier, CUC Executive Director Kevin Watson said the increase was unavoidable if CUC is to continue paying Mobil Oil Marianas for fuel deliveries.
“If we don’t have the funds to pay Mobil, they’re not going to empty the fuel when they pull up to our dock,” he said. “Then we won’t have diesel to power the engines.”
He said the jump from 24 cents to 44 cents reflects CUC’s financial reality: fuel costs have surged from $4.5 million to more than $8 million per month, leaving a $4 million gap that CUC had been absorbing through deferred maintenance and internal transfers.
“This is just putting a band-aid on,” Watson said. “It will slow the bleeding, but it’s not going to stop it.”
The CUC board on Thursday also discussed petitioning the CPUC for a possible FAC increase to 60 cents per kilowatt-hour.
Bryan Manabat was a liberal arts student of Northern Marianas College where he also studied criminal justice. He is the recipient of the NMI Humanities Award as an Outstanding Teacher (Non-Classroom) in 2013, and has worked for the CNMI Motheread/Fatheread Literacy Program as lead facilitator.
